U.S. President Donald Trump’s two-week ceasefire with Iran will not provide immediate relief to the aviation industry, as industry leaders warn that jet fuel supply disruptions will persist, according to Reuters.
Willie Walsh, director general of the International Air Transport Association (IATA), stated that it could take months for jet fuel supplies to stabilize, even if Iran reopens the strait of Hormuz. Ongoing disruptions to refining capacity in the Middle East continue to pose significant challenges.
Delta Air Lines reported that it expects lower profits for the second quarter. The airline plans to cut capacity across the board to offset an anticipated $2 billion increase in fuel costs in Q2.
Fuel costs, the second-largest expense for airlines after labor, account for about 27% of operating expenses. The closure of the Strait of Hormuz has severely restricted global jet fuel supplies.
Following the ceasefire announcement, oil prices fell below $100 per barrel as markets reacted to the potential reopening of the key shipping route.
Despite ongoing risks, many airlines saw their stock prices soar. Australia’s Qantas Airways rose more than 9%, Air New Zealand gained over 4%, and Hong Kong’s Cathay Pacific increased by 5%.
In Europe, major airlines performed even better, with TUI up more than 12%, Wizz Air gaining 10%, and Air France-KLM climbing around 14%. U.S. airlines also rallied in premarket trading.
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